UK “concerned” about Open Banking

By Rebekah Tunstead | 28 September 2018

More than three quarters of the UK are concerned about sharing financial data with organisations other than their bank, according to a recent poll by market research body, YouGov.

Of those surveyed, 77% said they were concerned around data sharing, with 45% saying they didn’t understand the benefits of Open Banking, and a large number of respondents saying they hadn’t heard of the initiative.

The introduction of PSD2 marked the beginning of a new eco-system for banks. The payment directive was introduced to create equal opportunity for payment service providers (including new players), while also making payments safer and more secure. PSD2 implements a level playing field by demanding that banks grant third parties access to their customer accounts.

The initiative has been widely embraced by fintechs keen to muscle in on the growing payments market.

“PSD2 and open banking represent an extraordinary opportunity for digital transformation in the payments industry,” says Cristina Astore, director of SIA’s international division.

The new measures are necessary to protect the consumer, but at the same time PSD2 obliges banks to offer a smooth user experience. This means that the security measures need to be compatible with the level of risk involved in the payment service. There is a balance to be struck between security and ease of use.

SIA, which designs, creates and manages technology infrastructures and services for financial institutions say their open banking platform will enable banks and other Payment Service Providers (PSP) to manage instant payments at European level and other SEPA payment and collection instruments.

“SIA’s Open Banking Platform allows banks representing our long-time reference partners, to enter a digital ecosystem and actively collaborate with other actors, from corporates to insurance companies, from fintechs to public sector organizations. And to change the paradigm that sees digital innovation as a phenomenon coming from outside that traditional banks may suffer from if they open their market to new players,” says Astore.

“On the bank side, the platform natively integrates the NextGenPSD2 API standards, managing its workflows. On the TPP side, the platform plays an “aggregator” role, integrating different API standards.”

PSD2 is supplemented by regulatory technical standards on strong customer authentication and common and secure open standards of communication, as well as guidelines on incident reporting and guidelines on security measures for operational and security risks.

The regulatory technical standards were published in the Official Journal of the European Union on 13 March 2018 and apply as of 14 September 2019. Therefore, payment service providers are not yet legally required to implement the respective security measures, but this leaves the payment industry just under 12 months to get ready.

“Our Open Banking Platform’s core functionality clearly addresses all the compliance requirements introduced by the directive, but it goes further by offering APIs that allow a step forward in the development of innovative services, based on a series of use cases designed with the Berlin Group within the NextGenPSD2 European initiative,” says Astore.

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